Gender equality: investor engagement moves the needle

To mark International Women’s Day this month, our equity, fixed income and stewardship teams provide an update about how they address gender inequality in the corporate world through engagements aligned with the Sustainable Development Goals (SDGs).

The World Economic Forum (WEF) Global Gender Gap Report 2020 shows that while gender equality is improving, there remains significant disparity between men and women globally. Worldwide, gender parity as measured by the WEF on the basis of economic participation and opportunity, educational attainment, political empowerment, and health and survival, has reached 68.6%.

But complete gender equality is not something we will see in our lifetimes – and likely nor will our children. Policymakers have a vital role to play if we are to make sizeable progress towards achieving gender equality, but investors must also fulfil their roles as stewards of capital in order to move the needle.

Although much remains to be done, we have seen some notable, positive changes as a result of our engagements with companies. The SDGs provide an ideal framework for engaging to create more impactful and financially successful companies. Below, we identify how three of our teams have been working collaboratively with firms to support the delivery of SDG 5: gender equality.

AMN Healthcare: positive symptoms

Gender pay inequality is an issue across professions, seniority and regions – but one sector we’ve been focusing on is healthcare. There is substantial evidence of significant pay differences across professions in this sector between men and women, from male nurses earning more than female nurses by 10% despite being outnumbered by 10:1, or a near-40% gap among physicians.

But the gender pay gap doesn’t tell the whole story of income inequality: companies need to extend their scrutiny to the ethnicity pay gap. According to the Institute for Women’s Policy Research, black women in the US are paid 61 cents for every dollar made by a white, non-Hispanic male – that’s a loss of more than $23,000 each year. To ensure the world of work is fair for all, companies must tackle structural and inbuilt biases in their workplaces.

To help bridge the gender pay gap, one company we have been engaging with is AMN Healthcare. It is the largest healthcare-employee supplier in the US, providing temporary and permanent staffing and workforce solutions to healthcare providers throughout the country.

Since 2018, we have spoken with the company’s Chief Executive on multiple occasions while also speaking with the Chair, Chief Financial Officer, Head of Investor Relations and other individuals through the business. We have been delighted by the response of AMN’s leadership team since we began to engage with them on the topic of gender pay inequality in the US healthcare industry.

AMN has been proactive in drawing attention to the scale of the problem since the early days of the engagement. Merritt Hawkins, a subsidiary of AMN, conducted research on the scale of pay inequality in the state of Maryland and evidenced that even when controlled for the number of hours worked, female physicians still earned 37% less than their male counterparts. The company’s public commitment within its 2018 Corporate Social Responsibility report, published last year, to “lead the healthcare industry on this issue” is further evidence of its laudable intention to both shine a light on this area of inequality and take action to address it.1

AMN is also advocating action at the industry level through the American Staffing Association and its individual businesses to promote evidence of the benefits of diversity. It is also escalating this topic with customers in a bid to overcome challenges, such as unconscious bias. Looking forward, the intention is to pilot measures to define inclusive hiring practices while developing initiatives to support female healthcare workers develop their careers.

Will Pomroy, Lead Engager, SDG Engagement and Small & Mid Cap Equities

1“AMN Healthcare Corporate Social Responsibility Report: 2018 Highlights,” published by AMN Healthcare in May 2019.

Technology: root and STEM reform

Human-capital management is an engagement theme we will continue to focus on over the next three years. In a knowledge economy, it is vital that companies look beyond physical assets to understand that their workforces generate long-term value – particularly if gender diversity is one of their strong characteristics. Diversity is valuable at different levels of typical corporate structures: including the board, executive management and operations.

Technology companies have traditionally employed few women, with even fewer women achieving senior management positions. Many tech companies that we engage will cite a talent pipeline with insufficient women as a reason for low levels of gender diversity, but this is not the full story: companies should acknowledge the issue and commit to addressing it meaningfully.

One of the companies we are engaging on gender diversity is a technology firm with female executive education and flexible working programmes. We have stressed that achieving gender equality requires more than education, and that women in leadership positions need sponsorship and clear development paths. In essence, companies in this sector should help expand the talent pipeline by supporting education in the science, technology, engineering and mathematics fields while focusing on improving diversity levels and inclusion practices throughout their organisations.

Dell: seeking a diversity reboot

We believe that bondholder engagement is equally as important as shareholder engagement. By having purposeful dialogue with companies in which we are invested, we can encourage them to think about ways that they can create economic value while mitigating stress on society and the environment. There are many companies in the global high-yield market that recognise the benefits of this perspective and have the willingness and ability to change, but have not yet focused on this. We can play an important role in their efforts to become impactful.

Through engagement, we can promote gender equality in the workforce and what it can deliver – enhanced collaboration, innovation and talent retention – and help companies take the steps needed to realise this change. One company we are currently engaging with is Dell, the US technology provider. We are in the early stages of the engagement but are pleased with the company’s degree of transparency and its willingness to improve.

Women currently comprise 30.4% of Dell’s workforce, but the company has set laudable targets for improving this in its latest social impact strategy, called ‘Progress Made Real’. By 2030, it aims to have women comprise 50% of its global workforce and 40% of its global people managers – which would almost double current representation at this level.

Aaron Hay, Lead Engager, Fixed Income

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